Copper Shakes Off China News To End Higher

NEW YORK (Dow Jones)--Copper futures posted mild gains Tuesday as downbeat Chinese copper import data curbed demand from investors searching for cheap assets or looking to pare bets on lower prices.

The thinly traded May-delivery contract settled 2.55 cents higher, or 0.6%, at $4.0295 per pound on the Comex division of the New York Mercantile Exchange.

The most actively traded contract, for July delivery, settled up 2.55 cents, or 0.6%, at $4.0420 per pound.

Investors continued to sort through last week's sharp declines in the commodities complex, with some deciding copper was a worthwhile investment at current price levels. A steep cascade in silver prices last week, sparked by rounds of trading margin increases, spread across the commodities complex as investors scrambled to shed the risky assets in favor of cash.

"We've had this commodities correction so it's not all straight up for these markets," said Bill O'Neill, principal with LOGIC Advisors.

Nor is the copper price path all straight down, as many traders are finding this week. While copper prices tumbled alongside other commodities last week, the metal's rebound is forcing some traders to pare back bets on lower prices, or short positions, which are becoming unprofitable as prices rise.

"There's still an element of short covering in these markets, all these markets are looking for their footing," said Ira Epstein, director of the Ira Epstein division of the Linn Group.

However, a steep drop in Chinese copper imports kept gains in check. China accounts for around 40% of world's copper demand, but the top consumer has been cutting back its purchases of the metal in recent months.

China imported 262,676 metric tons of copper in April, down 40% from last year and a 14% decline from March, according to preliminary data from the country's General Administration of Customs.

In the January-April period, imports fell 23% to 1.17 million tons.

"This is the weakest April in three years," traders at RBC Capital Markets said in a note to clients.

 
Copper settlements (ranges include electronic and pit trading): 
May $4.0295; up 2.55 cents; Range $4.0095-$4.0600 
Jul $4.0420; up 2.55 cents; Range $4.0040-$4.0840 
 

(Source: http://online.wsj.com/article/BT-CO-20110510-714836.html)